The fintech industry has come a long way in the past years. Digital lending, despite increasing interest rates and inflation, is now a booming business that has helped to solve some problems faced by both borrowers and lenders.
Based on Statista report, almost 70 percent of global customers embrace some forms of online banking, online credit, lending, transfer payments, and other payment services. Customers widely adopt these fintech systems in digital lending, alternative lending, non-traditional banking, personal finance, and digital insurance.
5 Top Trends in Financial Technology
With this rapid growth in fintech, new trends are emerging this year 2023 that will help transform the financial technology industry. This article discusses 5 top trends shaping fintech in 2023 and what they may mean for borrowers and lenders moving forward.
1. The Rise of Cloud-Based Fintech in Loan Origination
Cloud computing gives lenders to deploy a new loan origination system without investing too much in on-site IT infrastructure. This new financial technology allows lenders to identify issues and prevent risk. Cloud-based fintech provides customers with a more secure process, and lenders offer competitive rates.
2. Increased Use of Automation in Loan Processing
Repetitive and tedious tasks of evaluating borrower’s information is easier and more convenient through automation. In automation, loan processing performs faster, reduces manual labor, and streamlines repetitions. It also enhances the accuracy of data for revenue optimization and better decision-making.
3. Embedded Banking and Finance
Embedded finance is one of the emerging trends when non-financial companies offer financial products and services. It can be an e-commerce company giving insurance services, or a department store promoting credit cards with a one-click payment. Integration with websites and apps, and embedded finance creates opportunities for customers that traditional banks cannot cater to.
Another trending topic in digital lending is embedded banking. Customers seek new lending products and services in real-time and on demand. Financial companies are now adapting to changes in meeting customer expectations by humanizing banking.
4. Business Spend and Cost Control
With high volatility in global economies, financial companies are finding ways to cut costs and optimize efficiency. Financial leaders are susceptive to spending. That’s why real-time financial reporting is essential. Lending companies get help from spend management software which provides decision-makers with accurate spend data reports.
5. Increased Use of AI, ML, and API
Artificial intelligence (AI) and Machine Learning (ML) support lenders handle a large amount of data from new and existing clients for loan origination and processing. If you want to catch up to the latest trends in the digital lending game, investing in AI and ML is the way to go. The uses of AI and ML in fintech include:
· Better Sales and Marketing. Serve a lot of new borrowers and maintain servicing existing customers by getting data from a vast volume of data.
· Minimizes Risks. Identify possible risks and prevent them before it happens.
· Gets More Customers. AI and ML provide more leads and create targeted segments for more effective targeted campaigns.
Meanwhile, the use of API (Application Programming Interface) increases a third-party use of the lender’s platform for a broader market base. It also allows platforms to communicate and transact with each other faster.
Key Takeaway
Most banking companies and financial and non-financial intermediaries see global opportunities for revenue streams post-pandemic now that fintech is emerging. With the help of these top financial technology trends, big banks and fintech companies collaborate with other banks, and non-traditional financial institutions can forge collaboration.
References:
https://fintechmagazine.com/articles/fintech-trends-to-look-out-for-in-2023
https://itexus.com/lending-software-development-trends/#gref